United Fire Group, Inc. (UFCS) increased its quarterly dividend by 11% to 20 cents per share. The increased dividend will be paid on Jun 16, 2014 to shareholders of record on Jun 2.
United Fire Group’s annualized dividend of 80 cents per share yields 2.90% based on the closing price of $27.21 on May 21, 2014 and outperforms the industry average of 2.30%.
The recent hike marks the second consecutive increase by United Fire Group since 2008. Last May, the board approved a 20% increase in its quarterly dividend to 18 cents. Nonetheless, the property and casualty insurer has been paying quarterly dividends consistently since Mar 1968. A sturdy financial position backed by continued solid operational performance positions it well to increase payouts.
United Fire Group exited the first quarter with cash and cash equivalents of $66.7 million and cash from operations was $18.5 million. Retained earnings came in at a solid $495.8 million (up 1.8% from 2013 end). Based on about 25.4 million shares outstanding on Mar 31, 2014, United Fire Group needs to dish out about $5.1 million as quarterly dividend. Its solid liquidity supports the payout quite well.
There was no earnings momentum witnessed in the last seven days. In fact, the Zacks Consensus Estimate declined 2.7% following a weak first quarter earnings results wherein it missed the expectation by 36% and lagged the year-ago earnings by 44%.
With the news of a dividend hike, which retains investor confidence as well as attracts potential investors, we expect analysts to move their estimates northward and a consequent rise in the Zacks Rank. The stock presently carries a Zacks Rank #3 (Hold).
Other property and casualty insurers in news for increasing their dividends include ACE Ltd. (ACE) which approved a dividend hike of 3% to 65 cents per share, W.R. Berkley Corp. (WRB) which announced a 10% hike in the quarterly dividend to 44 cents per share, and RLI Corp. (RLI) which hiked its quarterly dividend by 5.9% to 18 cents per share.